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Failure! What failure? Things to do with patent filing figures

Was it only yesterday that this Kat, in his Wednesday Whimsies, posted a link to the UK Intellectual Property Office's The Patent Guide A handbook for analysing and interpreting patent data, which states:

"At present there are clear differences in perspective between professional patent experts, researchers undertaking patent analysis and the audience for this research, which includes governments, the press, businesses and individuals. Such differences increase the possibility for incorrect analysis or inappropriate interpretation of analysis. Decisions based upon this could be incorrect and potentially harmful".

Funnily enough today the European Patent Office publishes some patent data on which this Kat's friends at the Chartered Institute of Patent Attorneys have already pounced, producing the following media release. Note the headline assertion that British business is failing to protect innovation, then read on. The media release reads, in relevant part:

EUROPEAN FIGURES SHOW
THAT BRITISH BUSINESS

IS FAILING TO PROTECT
INNOVATION

Figures released today ... by the European Patent Office show
that, while UK patent filings have increased since last year, domestic
businesses are falling behind the rest of Europe in protecting and exploiting
their intellectual property.

The EPO released its annual report today which shows that UK filings
have increased 4.8% compared to 1.2% average growth across Europe. This was the
highest growth in UK filings since 2011.

However, the figures also show that of the seven leading European economies,
only Italy is below Britain, both in terms of patent filings per $US billion of non-service
Gross Domestic Product and per head of population (see graphs).

Leading patent attorney Matt Dixon said, on behalf of CIPA: “British
businesses need to wake up and realise that patents ... are a key part of everyday innovation strategy. Without protection for their products, British businesses leave
themselves wide open to competition from lower cost economies, such as China,
who can simply copy technology with impunity. In an innovation economy, where 80% of a business’ assets are
intangible, companies cannot afford to fail to protect the fruits of their
product development.

“The UK is only slightly better than Italy in the rate of European
patent filing per head of population and way behind Germany, France, Sweden,
Switzerland and the Netherlands.

“Even if
account is taken of the UK’s significant
service sector, where less patenting would be expected, the picture remains the
same; Britain has fallen behind other European countries.”

This Kat wonders how such a depressing conclusion can be drawn from the data in question and he hopes that readers may be able to assist him, either by showing him how it can be done or by showing that it can't. He struggles to understand why either the number of patent filings per $US billion of non-service Gross Domestic Product or the number of patent filings per head of population should reflect a failure to protect innovation, especially when

the patent system only covers some forms of innovation but not others,

innovations in, for example, processes which cannot be reverse-engineered may be better exploited commercially by not filing for a patent,

there exist other intellectual property rights which, when deployed individually or in combination with one another may provide better, longer or cheaper forms of protection,

the number of patent filings may reflect norms of professional advice which vary as between countries

to name but a few factors that may be of relevance. This Kat hopes that he will receive responses from economists and statisticians -- and in particular from members of the IPO's Informatics team, whose big chance this is to prove themselves.

Failure! What failure? Things to do with patent filing figures
Reviewed by Jeremy
on
Thursday, February 26, 2015
Rating: 5

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35 comments:

One has to look into which sectors contribute to Gross Domestic Product. If it is a financial sector, banking, insurances, education. It is clear that you cannot patent much there. The trademarks, for example, can be more relevant.

Yes, these figures make little sense. Typical PR stuff. It would make more sense to compare EP filing figures weighted to take into account the size of the national manufacturing, technology and scientific sectors, instead of business generally.

From a very quick check of CTM stats of filing by origin country (2013-2014)(https://oami.europa.eu/tunnel-web/secure/webdav/guest/document_library/contentPdfs/about_ohim/the_office/SSC009-Statistics_of_Community_Trade_Marks-2015_en.pdf)The percentage changes are DE -6%, FR +0.2%, CH +5%, NL +8%, GB +8%, SE +9%, IT +6%. The comparable RCD stats show UK as the fourth biggest user behind DE, IT, FR. This is hardly a ringing endorsement of the UK as an IP powerhouse seeking to protect its assets by means other than patents.

I am not an economist so my comments are probably of no interest to the Kat, but anyway:

anon at 00:18: It says "non-service", so it already excludes service industries.

"patents only cover some forms of innovation". Yes, but the same applies everywhere else too, so the sample of "patent-worthy" innovation is a valid indicator. Such innovation is directed to products, "things" that are made, sold, advance society - healthcare, infrastructure, environmental etc etc. Trademarks protect things like investment in multi-million dollar advertising for a new flavor of yoghurt or the branding of a bog-standard cheddar cheese to add value to a bog-standard cheese mountain.

"process that can't be reverse engineered". Same applies everywhere else, unless the kat has examples and evidence proving otherwise?

"other IP can be better". Again (sorry to be repetitive), same applies everywhere. In any case, patens protect the important things mentioned above. Maybe the kat believes we are ahead in non-protectable software and stuff, but I don't believe that to be the case.

"patent filings reflect professional advice" Really? So attorneys in all other countries tell their clients to patent willy nilly, while the more discerning Brit only advises to protect the really pukka stuff?

The lack of appreciation of these damning statistics by the kat is, in my view, due to their academic and 'generalist' private practice background, which means they can list numerous forms of protection: patents, copyright (I know that one), etc. They are all important in their relevant area, but patents are a key measure ion the areas mentioned above.

There are some national factors resulting in a disproportionate number of filings, usually related to inventor-rights, but not enough to account for the huge differences.

The national factors of true relevance are those that 'jobbing' patent attorneys see on a daily basis, which have been noted by many.

Anonymous of 00:18: That would be why the statistics specify "non-service". All the sectors you have listed there would be considered service industries.

As for the article, surely the 5 factors identified at the bottom are true in all countries (at least those where the options of EPC patent, community trademark and community design would generally be preferred or equal to the local offerings).

Of course, for the non-service GDP figures, it could be argued that we're just better at commercially exploting the patents we get (i.e. we make three times more money for each granted patent than Germany). Therefore any "failure" to protect innovation is clearly not having that much impact. (not that I necessarily agree with that argument, but it fits the data just as well as the headline).

I also wonder how meaningful filing statistics are compared to grant statistics, since the former are much easier to inflate through deliberate policy or poor practice.

More to the point surely is that UK businesses do not invest in the R&D and invention processes that would result in patents. We are not failing to protect stuff, we are failing to create it in the first place. That is a terrible condemnation of the short-termism of British business leadership over a long period of time.

It's still pretty much the same story whichever way you cut it. My comments are not just based on the data, but also on the experience of how British companies view patenting in the context of their overall business priorities and I'm pleased that I'm seeing some agreement in the comments above.

So much Kat twaddle. Stop trying to nuance this folks. Save us from Economists!

Per capita the UK files 25% of what Germany files. THAT IS MASSIVE! Can anyone with any grey matter not grasp the significance?

Puny? It is a national disgrace.

Will it hit the six o'clock news?

LOL!

@Joff....the short termism is that there are no companies to invest R&D money. This perplexes those who offer R&D tax credit services. They think that companies are ignorant of the tax break but it is slowly dawning on them that these R&D spending companies do not actually exist. Just wait for the Patent Box data if we ever see it.

The high number of filings in Germany is more a result of the legal situation with the Arbeitnehmererfindergesetz, almost obligating a firm to file an application if an employee submits an invention disclosure. In my former position as an in-house practitioner in the UK, a degree of consideration went in to deciding whether such a disclosure justified a patent application or not.

I think the headline assumes that the UK is creating inventions that are not being protected.

Maybe Brits are less creative?

As 90% of patents don't create wealth, it is possible that Brits are creative but are more sophisticated in deciding whether to file applications or not.

It is also possible that British creativity is directed towards methods of doing business that are not patentable.

I would take these statistics with a lot of condiments. It is at least as interesting to consider the type of patent, the level of commercialization of inventions and to realize that not all patents are similar.

In fact, Figure 2, where the ratio of patent filings to population is shown is not really representative, because in this Figure the structure of GDP is important, while it is different for each country.

The UK service sector is bigger than in The Netherlands, Germany, Switzerland (people also work there ...). Respectively, the ratio of patent applications to population is smaller in UK. This makes perfect sense.

These are filings at the EPO only and do not take into account national filings:

UK applicants filed 6823 applications at the EPO in 2014 (up 4.8% from the 6510 in 2013). The UK-IPO has yet to publish their 2014 stats but they received 14,971 UK patent applications in 2013 from UK applicants, over double the number received from UK applicants at the EPO.

So take these EPO figures with a pinch of salt, it's not the full picture.

When considering any statistics, I think that the first graphic in the previous "Wednesday Whimsies" says it all: in a course that I attended at the Civil Service College many years ago, we were all given identical copies of a set of genuine official statistics, and a statement. We were then split into two groups, one having the task of producing figures showing that the statement was true, the other that it was false. Both groups managed to do this. Coming from a scientific background and used to the approach of the left-hand character, this was a real eye-opener. Experience indicates that Officaldom generally behave like the right-hand character, and now whenever I come across official statements mentioning "the figures show that", I wonder about all the other figures that say something to the contrary.

So, 9:10, you argue that the UK is innovative and British business protect tier IP, but they do so at the UKIPO? Assuming this to be correct, doesn't it just prove that UK businesses are not thinking big enough and failing to consider non-UK markets?

Perhaps. But when it comes to patenting strategy it's not one-size-fits-all; some businesses and markets only require national protection, others consider that they can adequately cover Europe with three national patents (GB, FR, DE), others use the EP route. And there's other things to consider such as the speed and quality of the different patent offices too.

It's a fair point that the EPO filing figures are not the whole story, but the UKIPO's figures show that patent applications from UK applicants decreased from 15,370 to 14,971 from 2012 to 2013.

As mentioned previously in this thread, patent grants might be a better indicator than applications (especially in the UK where anyone can file a patent application for FREE). Patent grants to UK applicants went down from 2,974 to 2,464 between 2012 and 2013.

Note also that something like 4 out of 5 of the UK applications filed don't go to grant. One reason might be that these are only providing the priority applications for an international filing programme. Another reason might be that there are many frivolous applications in view of the ease and zero cost for anyone of filing patent applications at the UKIPO.

This reader finds it hard to see how such a depressing conclusion could not be drawn. The possibly confounding factors listed at the end of the article could perhaps explain differences of degree – France or Germany being, say 30% above the UK, but we are talking about multiples here - just look at the histograms. Plus, there is no credible hypothesis as to why these factors should vary depending on location within EPC countries where patent law is substantively the same. The comments about “other IP rights” and “reverse engineering” just don't make legal sense. We are talking about technical inventions here. You can't patent or trade mark them.

I took the numbers from wiki:http://en.wikipedia.org/wiki/List_of_countries_by_GDP_sector_composition

As you can see: Netherlands, Switzerland, Sweden have industry GDP 35%, 31% and 25% of the UK industry GDP.

Therefore, if the amount of filed applications is more or less the same per country, the column for UK would be 3 times shorter because UK has a very high industry GDP in comparison with Netherlands, Switzerland, Sweden.

Also, France and Italy have smaller industry GDP than UK. Thus, if these 3 countries (FR, GB, IT) would file the same amount of applications, the columns for France and Italy would be longer…

With all this, it seems that UK realises the highest GDP per patent application, while having a high GDP overall, which is a positive message.

P.S. Besides, do not forget that software related inventions are mostly not in the columns ….

Bringing a product to a given market requires X patents. X patents, independently whether it is a Swedish, German or UK company, because X reflects required innovation effort and existing market risks.

What is the point in dividing this number X into the financial outcome from the product ??? This is what is done on Figure 1.

Irrespective of my political views, I fail to see how UKIP and an EU referendum come into play.

And while I may favour EU membership, I see you are of the view that the Great British public are to dumb to make a decision on their best interests.

And, while it may be less risky economically to maintain EU membership, ultimately it has become a political question as the EU is moving much further away from economic union with principles of free movement, but into a federal superstate. I may favour a weaker economy to retain sufficient independence.

If the Germans believe a more integrated Europe is necessary to dissaude then from starting World War III, that is their prerogative. The French are clearly happy to be under German control and other little places enjoy the benefits of rich uncles.

The climate of corporate governance, investment priorities, and IP procurement and enforcement system in the UK simply has not engendered a culture that has supported the use of IP within firms to build and support positions of strategic advantage within competitive markets. That and the UK BERD rate has been woefully low.

As a result companies operating in the UK are starting on the back foot when looking to compete in global markets. We don't have the corporate culture that sees value in IP and is not practiced in converting knowledge assets, whether proprietary, confidential or tacit, into profitable and successful business ventures.

Less savvy UK clients need a lot of handholding. There is any number of UK businesses with very little handle on their intellectual assets or any IP strategy to support their commercialisation.

Without an understanding of their assets or an effective strategy, commercial success is less likely.

UK businesses are just less good at the basics and are hamstrung by the culture of ignorance.

I'm with CIPA and most of the Anonymous family. The Kat sees these depressing statistics and just says "I'll not worry until an economist tells me to worry".

What if it was deference to economists that drove us up this alley in the first place?

Meanwhile, competiting nations can widen the technology gap year on year and we are condemned forever to be the buyer not the seller.

It doesn't matter how you slice the statstics they are bad: Either we are not doing the kind of R&D that normally yields patent, or we are doing the R&D and failing to patent. If only it were the latter, we could fix it quickly.

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